Request for...

Procurement Processes (RFT RFQ RFP RFI)

by Suki Mhay
Clients and Newsletter readers have asked that we demystify the meaning behind each of the
following procurement terms: RFI, RFQ, RFT and RFP. These processes have steadily grown in
popularity in procurement and purchasing, expecially amongst larger buying organisations. In
practice you will find these phrases used interchangably, as many organisations dont understand
the differences sufficiently. Many procurement or purchasing departments use these purchasing
processes to write the rules of the buying game, trying to side-step negotiation. There is a great
deal that suppliers can do to improve their position. As a starting point, we suggest that sales
professionals understand the differences between these processes. We would be glad to talk with
both suppliers and buyers wishing to get the best deal from these processes.
RFI Request for Information
An open enquiry that spans the market seeking broad data and understanding.
RFQ Request for Quotation
An opportunity for potential suppliers to competitively cost the final chosen solution(s).
RFT Request for Tender
An opportunity for potential suppliers to submit an offer to supply goods or services against a
detailed tender.
RFP Request for Proposal
Sometimes based on a prior RFI; a business requirements-based request for specific solutions to
the sourcing problem.

Request for Information (RFI)

As the name suggests, RFIs gather information to help decide what step to take next. RFIs are
therefore seldom the final stage, but instead are often used in conjunction with the other 3
requests detailed in this article.
An RFI is a solicitation sent to a broad base of potential suppliers for the purpose of
conditioning, gathering information, preparing for an RFP or RFQ, developing strategy, or
building a database about:

The suppliers, including: facilities, finances, attitudes, and motivations

The state of the supply market
Supply market dynamics
Trends and factors driving change
Alternative pricing strategies
Supplier competition
Breadth and width of product/service offerings, by supplier

Supplier strategic focus, business, and product plans

RFIs may include a detailed list of products/services for which pricing is requested. The pricing
should be used for comparative purposes, not as the basis of buying decisions. Through analysis
of RFI responses, strategic options, lower cost alternatives, and cost reduction opportunities may
be identified.

Request for Quotation (RFQ)

RFQs are best suited to products and services that are as standardised and as commoditised as
possible. Why? To make the suppliers quotes comparable.
An RFQ is a solicitation sent to potential suppliers containing in exacting detail a list or
description of all relevant parameters of the intended purchase, such as:

Personnel skills or competencies

Part descriptions/specifications or numbers
Quantities/Volumes
Description or drawings
Quality levels
Delivery requirements
Term of contract
Terms and conditions
Other value added requirements or terms
Draft contract

Price per item or per unit of service is the bottom-line with RFQ's, with other dimensions of the
deal impacting the analysis process as determined by the buyer. Supplier decisions are typically
made following a comparison and analysis of the RFQ responses.
RFQs are typically used as supporting documentation for sealed bids (either single-round or
multi-round) and may be a logical pre-cursor to an electronic reverse auction.

Request for Tender (RFT)

An RFT is an open invitation for suppliers to respond to a defined need as opposed to a request
being sent to potential suppliers. The RFT usually requests information required from a RFI.
This will usually cover not only product and service offerings, but will also include information
about the suitability of the business.
It is not unusual for a buyer to put out unclear or vauge business requirements for an RFT. This
makes it challenging for the supplier to propose a solution. This is not the best use of a RFT.
RFTs should only be used when the buyer is clear on their requirements, and is also clear on

A RFT is not a very time or cost efficient method to source supply due to its lack of defined
business requirements and open invitation for suppliers to respond.

Request for Proposal (RFP)

An RFP is a solicitation sent to potential suppliers with whom a creative relationship or
partnership is being considered. Typically, the RFP leaves all or part of the precise structure and
format of the response to the discretion of the suppliers. Indeed, the creativity and innovation
that suppliers choose to build into their proposals may be used to distinguish one from another.
Effective RFPs typically reflect the strategy and short/long-term business objectives, providing
detailed insight upon which suppliers will be able to offer a perspective. If there are specific
problems to be addressed in the RFP response, those are described along with whatever root
cause assessment is available.
While specific data, offerings and quotations may be sought, questions about the following will
make up a significant portion of both an RFT an RFP:

The specific items on which the suppliers are proposing

Business requirements
Performance measures
Information
Ideas
Instructions on how to reply
Due date
How will we evaluate how feedback will work
Describe the process for selection
Request for cost breakdown (sometimes)
Communication: cover letter (sets the stage), calls in advance
Who to contact with questions
Addressee - chosen carefully

Advice
Buyers: to correctly implement these processes requires having an organisational infrastructure
to support it. Else theyll be used as a token exercise to youre your department happy, and
circumnavigated in practice. Whilst The Negotiation Experts does offer clients some limited
advice in this area, we do specialise in negotiation skills training and negotiation consulting
services.
Sellers: How and if you participate in these processes is the first question you need to address. If
you have a company policy, be sure to examine your and the buyers competitive position and
power before participating. Not doing this can end up costing you the business, or worse.